Two Directors On Ally Financial's Board Plan to Retire in July

Henry Miller and Brian MacDonald Don't Plan to Stand for Re-Election

Ally Financial Inc.,
ALLY -0.11%
the auto lender partially owned by the U.S. government, said Friday two directors previously appointed by the Treasury Department will retire from the company's board in July.

Henry Miller
and
Brian MacDonald,
who were appointed to Ally's board in 2012 and 2013, respectively, don't plan to stand for re-election, the company said in a regulatory filing.

At the same time, Jack Stack, currently a director on the board of Ally's subsidiary bank and formerly a director on the overall company's board, was nominated to the board, alongside with the rest of Ally's existing directors.

The changes reduce to 10 from 11 the number of directors on Ally's board, and follows the company's initial public offering in April, which raised $2.38 billion for the U.S. government.

Ally received a $17.2 billion infusion of taxpayer funds during the financial crisis through Treasury's Troubled Asset Relief Program, or TARP. The bailout was intended to keep Ally afloat as it was hit by a wave of losses from subprime mortgages made by its former subsidiary, Residential Capital LLC.

Ally's IPO has since repaid $17.8 billion to the government following the IPO.

Treasury's investment in Ally gave the agency the right to appoint a certain number of directors to Ally's board. At one time, the agency had the ability to appoint as many as six directors. That has dwindled down as the government's ownership stake in the company has shrunk through a series of transactions.

Based on the government's current 16% stake, Treasury has can appoint one board member.

Treasury is nominating existing director
Mathew Pendo
as its appointee.

Mr. Pendo, who at one time was chief investment officer of TARP, was originally appointed by Treasury to Ally's board last year.

Ally Chief Executive
Michael Carpenter
has said he expects Treasury to sell its remaining stake in the company by the end of the year, enabling the auto lender's exit from the TARP program.

No longer being a ward of the government would allow the company to break free from "handcuffs" that regulators have placed on Ally, Mr. Carpenter said in an interview in April.

For example, banking regulators have limited the rates that Ally can pay depositors while holding the company to high capital requirements, he said. The company also is subject to compensation restrictions due to its participation in TARP.

Getting out from under government ownership may eliminate uncertainty among some clients and potential business partners, Mr. Carpenter said at the time.